Koninklijke Ahold Delhaize (Euronext:AD) Q1 2026 Earnings Call

0:00 Ladies and gentlemen, good morning and welcome to the Analyst Conference Call on the First Quarter twenty twenty six Results of Arjo Darhays. Please note that this call is being webcast and recorded. During this call, Arjo Darhays anticipates making projections and forward looking statements. All statements other than statements of historical facts may be forward looking statements. Forward looking statements are subject to risks, uncertainties and other factors that are difficult to predict and that may cause our actual results to differ materially from future results expressed or implied by such forward looking statements.

0:46 Therefore, you should not place undue reliance on any of these forward looking statements. The introduction will be followed by a Q and A session. Any views expressed by those asking questions are not necessarily the views of Ahold Dahes. At this time, I would like to hand the call over to JP O'Meara, Senior Vice President, Head of Investor Relations. Please go ahead, JP. Thank you very much, Heidi, and good morning, everyone. I am delighted to welcome you today to our Q1 twenty twenty six Results Conference Call. On today's call are Franz Muller, our President and CEO and Yolanda Futzweil, our CFO. After a brief presentation, we will open the call for questions.

1:31 In case you haven't seen it, the earnings release and the accompanying presentation slides can be accessed through the Investors section of our website, aholddez.com, which also provides extra disclosure and details for your convenience. To ensure everyone has the opportunity to get their questions answered today, I ask that you initially limit yourself to two questions. If you have further questions, then feel free to reenter the queue. To ensure ease of speaking, all growth rates mentioned in today's prepared remarks will be at constant exchange rates unless otherwise stated. And with that, I hand over to you, Frans. Thank you very much, JP and good morning everyone. We had a solid start to the year. Our Q1 performance reflects the strength of the foundation we have built with our growing together strategy, focused on delivering value for customers, associates and all our stakeholders and this every day.

2:28 This is underpinned by clear choices, investing in our customer value proposition, strengthening our portfolio and expanding our footprint while maintaining discipline in how we allocate capital. We continue to operate in a dynamic and at times more demanding environment. Food inflation was more moderate in this quarter with year over year deflation in several categories, which has been helpful to consumers. At the same time, geopolitical tensions, including the recent conflict in The Middle East are contributing to uncertainty, energy prices are elevated, putting further pressure on household budgets. This is not necessarily new for us. We have managed through similar conditions before and we are applying those learnings today.

3:19 For example, customer value remains at the heart of everything we do. Across our brands, we continue to invest in price, in quality and in relevance. Whether through our own brands or fresh offering or the experience in our stores and digital platforms. In an environment like this, consistency builds trust and trust drives share. Secondly, we remain disciplined in how we run the business. We focused on cost, on productivity and on simplifying how we operate, but always with the flexibility to support our brands locally. We have strengthened our energy position by moving to longer term contracts and increasing the use of renewable energy sources.

4:04 And we are further embedding shoot cost models to ensure cost increases from suppliers are proportional, transparent and well managed. And lastly, we continue to invest in the future. We are sharply focused on our growth model, combining scale, relevance and execution. And whether in digital and data or in omni channel capabilities, we are building a platform that allows us to serve customers in more relevant and more personal ways. These factors gelling well together enable our strong financial performance and our ability to deliver consistent and attractive returns for our shareholders. Looking at the quarter, net sales and comparable sales excluding gasoline increased 2% at constant exchange rates.

4:56 We delivered an underlying operating margin of 4% and diluted underlying EPS increased 8.9%. When we launched our strategy when we launched our strategy growing together, I talked about quality. It's a defining characteristic of the culture of how we operate our company, the quality of our sales, the quality of our brands, the quality of our execution, and foremost, the quality of our people. And that's the lens I would like to use as we look at our results today. Customers continue to navigate the environment carefully, making deliberate choices and seeking value. Our response is clear, strong, consistent customer value.

5:43 Across our U. S. Brands, excluding some technical and macro factors, Yolanda will go through in more detail, our first quarter sales performance kept a similar pace to the trends we have seen last year. And inside this growth, we are enhancing own brand assortments, executing our second full year of on top price investments and optimizing personalized offerings. Own brands continue to outpace the rest of the store in both sales and volume, supporting price perception and margin quality. And at the entry level, we are playing into the growing demand from customers who are looking for high quality products at affordable prices. Examples for The U. S. Includes Stop and Shop lowering everyday prices across key states, Anaphorc introducing refreshed on brand packaging to improve navigation and value perception and the giant company launching its Simply Low campaign.

6:46 At Stop and Shop, Roger and the team are leveraging strong local knowledge. Volumes are trending positively. Online penetration is at record levels and own brand growth is strong. Customer response to price investments remains encouraging and NPS continues to reflect strong engagement by customers to the actions we are taking in the day to day quality of our execution. As we have now seen several quarters of consistent improvement at Stop and Shop, we will accelerate our store remodel program and expand our price investments across the full fleet by the end of twenty twenty six with over 40 targeted store remodels planned for 2026 to further improve the in store experience.

7:36 Staying with quality sales growth, in Europe, performance was a little ahead of where we had anticipated. Our brands continued to strengthen their positions through relevance and execution. And key developments here include the Del Food acquisition, adding over 300 convenience stores in Belgium, continued rollout of Delhaize affiliate model to seven new locations, offering customers the best the last standards with appealing assortments, the latest digital experiences and great local customer service. And we made progress in Serbia following the end of government pricing measures. Simultaneously, our European brands are using their own brand propositions to play a leading role in innovation across our store.

8:27 Recent success stories include, for example, Albert Heijn's recently renewed barbecue assortment with over 18 new products right on time for the sunny weather. Alpha Beta's award winning own brand range called AV Close to the Greek Land, highlighting their commitment to high quality products inspired by the richness of the Greek gastronomy and local production. And to support customers who have faced ongoing pressure on their household budgets, Maxi Serbia significantly stepped up their own brand offering. Switching gears now and let's talk about the quality of execution. Our omni channel proposition continues to scale. And for example, in The US, online sales grew 14.3% at constant exchange rates, marketing the eighth consecutive quarter of double digit growth.

9:24 Over 90% of customers have access to online shopping and more than 90% of online sales are fulfilled through same day services. At BOLD, where consumer discretionary spending in general is less robust than last year, we are on top of the rapid changes in customer behavior with AI and social commerce reshaping how customers shop. Maite and her team are expanding both suite of AI powered tools, including the soon to launch Shopper Agent, ensuring customers have the support they need throughout their total shopping journey. In Romania, we have merged Mega Image and Profi into one legal entity under the leadership of Xavier.

10:11 Xavier who has an extensive track record at MeguiMage recently served as brand president at Delhaize Belgium and brings deep expertise in driving change. The synergy capture from the integration is progressing well, which will provide fuel as we speed up space expansion in the quarter ahead. As we focus on the quality of execution, technology helps us secure it for the future, bringing greater consistency, efficiency and precision at scale. And with technology and innovation, we stay curious and disciplined, exploring early and scaling only when our customers are ready and it fits our business. Our approach to AI is a good example.

10:56 Under the leadership of Jan Brecht, we have brought 30 experts together in a group focus area to speed up execution and learning and the power of our portfolio is we can trial and learn a lot quicker than a single operator. And this is similar to what we did with things like retail media or mechanization. As you see with outcomes like Edge, our European, US European retail media application and our fully mechanized e commerce fulfillment centers in The Netherlands, we test and learn quickly and scale what works. For AI, we concentrate on four domains, sourcing and merchandising, marketing, store operations and agentic shopping.

11:44 And with more than 100 active use cases, we are already capturing value by improving availability and freshness, optimizing pricing and assortment decisions and increasing operational efficiency in stores. And again, we can integrate these across the system. We really see compounding effects. As we built on our existing AI supported store associate app in Albert Heijn, we are moving towards a self optimizing store. Here AI serves as the store's brain, reading every signal and orchestrating work across people, systems and devices, including electronic shelf labels. And lastly, before I hand over to Yolanda, I would like to spend a few moments on the quality of our people and the strengths of our distributed operating model.

12:36 What continues to set us apart is the strength, experience and passion of our local teams. They are closest to the customer, owning the business in real time and making decisions every day that truly count. And around them, our support functions continuously improve, simplify and strengthen the system so that our brands can perform at their best. As you will have seen from this morning's announcement, the Supervisory Board has completed a thorough process to identify Thierry Garnier as my successor. And in the meantime, I remain fully committed with a clear strategy that this focus and is delivering results. My priority over the coming periods is exactly where it should be, strengthening the foundations for the long term and deliver on our promises in the short term, but also working with our teams, keeping the business on track and continue to execute with discipline and consistency.

13:38 Now over to you, Yolanda, to talk more about the financials. Well, thank you, JP, and thank you, Franz, and good morning to everyone. Reflecting on the current market environment, customers remain both resilient and selective. They are adapting, seeking value, making deliberate choices, and increasingly rewarding consistency and trust. Picking up from France, staying closely in sync with the environment and being closely connected to customers with our local teams is a strength. Our proximity to customers and strong footprint of stores are an asset. With 77,000,000 customers shopping with us every week, our primary data gives us insight into changing needs from price sensitivity to convenience and seasonal trends.

14:25 It allows us to respond locally at speed and execute our strategy at a cadence that we carefully adjust as conditions evolve. I'm pleased with our Q1 performance as it reflects discipline in action. And the solid start to the year provides us with space to be agile as we trade through the coming quarters and continue to invest in prices to support our customers and drive growth. Let's have a look at the key underlying numbers for the quarter. Net sales grew 2% to €22,300,000,000 While the sales growth rate was less robust than in prior quarters, our sales were resilient. We are pleased with overall positive volumes, which underscores that our strategy is fit for purpose as we are relatively outperforming the market.

15:16 Health continues to be a key differentiator. As demand grows for high protein and healthier options, products like our high protein yogurt and cottage cheese are among our best sellers with around 30 new high protein items planned for this year. Over 50% of own brand sales already come from healthier products. We are now expanding our ambition across the full store, making healthier choices more accessible, more affordable and more relevant. Our underlying operating margin was 4%. Strong performance in The U. S. And an increase in insurance results at Ahold Delhaize Group more than offset the effect of the governmental degree and intervention on grocery industry prices in Serbia.

16:04 Diluted underlying earnings per share was $0.62 up 8.9%, primarily driven by higher underlying operating profit and the impact from the share buyback program, partially offset by higher financial expenses and income taxes. Slide 18 shows our results on an IFRS reported basis for Q1, which were in line with our underlying performance. For your convenience, slide 19 provides our comparable store sale plans with and without adjustments for weather, calendar and other notable items. Looking at the regional performance in more detail, U. S. Net sales were 12,700,000,000 Euro. Comparable sales, excluding gas, increased 1.5%.

16:53 Top line performance reflected a mix of factors: weather and calendar, with a positive impact of 40 basis points pharmacy sales were impacted by the Inflation Reduction Act, with a negative impact of 70 basis points ad prices, normalizing sharply versus last year, a negative impact of 65 basis points and the SNAP program changes reduced the benefits available to lower income customers with a negative impact of 55 basis points. Together, these factors reduced our growth rate by 1.5 percentage points. Underneath this, volumes remained stable and our competitive position is strong, demonstrating the resilience of our model.

17:39 To help with your modeling for the coming periods, here are a few things to remember. We now expect an approximate $450,000,000 impact on U. S. Reported and comparable sales for the year from pharmacy pricing. Ags will impact Q2 top line, but to a lesser extent as market prices stabilized gradually as we moved into the second half of the prior year and reduced SNAP benefits to continue to put pressure on our lower income customer with uncertainty around the exact magnitude and trajectory of these changes. We will closely monitor the impact throughout the rest of the year as changes in the program are deployed. Underlying operating margin in The U. S. Was 4.6%, up 20 basis points from the prior year.

18:30 Higher sales leverage and a favorable mix from winter storms, the positive margin impact effect from cost deflation in X and a favorable mix in pharmacy more than offset price investments and additional costs related to the winter storms. In The U. S, our omnichannel proposition continues to be a strong growth engine and one of our key competitive advantages. We finished Q1 with a record high penetration level of 10%, with some of the brands already above 11%. Our customers value our partnerships with third parties as our network allows to further expand the accessibility and convenience of our online services to existing and new customers.

19:16 In q one, online sales through these channels grew by over 20%. We recently welcomed Uber Eats to our network, but are excited about the growth opportunities ahead, especially given Uber Eats' strong urban presence and membership program, allowing us to tap into new audiences. Turning to Europe. Sales were 9,600,000,000 Euro. Comparable sales grew 2.7%, excluding the net impact from calendar shifts at the end and the end of tobacco sales in Belgium. We have now fully cycled the impact of tobacco sales. Online sales grew 3.3%, while online grocery sales grew 7.4%.

20:02 Overtime performance was negatively impacted by severe winter conditions, which disrupted delivery capabilities in January. Adjusted for this, Albert Heijn's online sales grew by double digits. Performance at Ball was impacted by the cycling of a strong prior year and increased consumer pressures, contributing to down trading within both assortment. Underlying operating margin in Europe was 3.4%, down 10 basis points from the prior year. The realization of synergies and a lower turnover tax rate, or IMCA, in Romania partially offset the impact from the governmental degree in Serbia, which was in effect through February. Now that the degree has ended, our teams are executing recovery plans as we rebuild our position in the market.

20:54 We are assessing the impact of the new law on unfair trade practices or UTP, which was adopted in April in Serbia. New rules on temporary labor in The Netherlands are coming through and planned increases to the youth minimum wage take effect from 2027. We are addressing the high cost pressures through tight cost control, productivity improvements and operational efficiencies. Moving on to slide '22. Q1 free cash flow was a negative $330,000,000 Euro, driven by net working capital due to the calendar and seasonal phasing between the quarters and year on year. This is largely timing and our 2026 guidance for the full year remains unchanged.

21:41 We invested €600,000,000 in gross capital expenditure. Our brands are well on track with our store remodeling program, elevating our store fleet and integrating the latest innovations to offer our customers a seamless shopping experience while growing our complementary business models. We also opened 41 new stores, including two new Food Lion stores, and in February, the giant company announced the acquisition of two family owned stores in Pennsylvania, which will open later this year. That wraps up my financial review of Q1 and brings me to our outlook. Given the solid start of the year, we reconfirm our guidance. While external risks have increased, we remain confident in our plan.

22:31 This summer period, we have strong activation plans in place to drive volumes and market share. We will also step more aggressively into price investments as we time higher activities to capture the big moments of summer period. Although we do not provide specific quarterly guidance, phasing effects in and between the quarters are to be expected as we flow investments in line with real time trading conditions, allowing us to stay sharp and calibrate actions while always keeping an eye on our full year goals. In closing, we build our growth model not just to navigate challenging conditions, but to perform through them and to grow with them. In times like these, performance isn't driven by big statements. It shows up in those everyday moments when customers choose our brands because they trust the value we offer.

23:25 This is in our culture, the strength of our local teams, their know how and their passion to serve their customers in real time, supported by systems and central skilled competencies, which continue to improve and simplify how we work. Together, this gives our business model a lasting edge and gives us gives us the confidence in delivering sustainable long term value. And with that, I thank you for tuning in. And Heidi, please open the lines for questions. Thank you. We will now begin the question and answer session. If you wish to ask a question, We will take our first question.

24:18 The question comes from Will Woods from Bernstein. Please go ahead. Hello, good morning. Congratulations, Brian, on the long and impressive tenure at Arjo Delhaize. I'm sure we'll be speaking on the next few earnings calls. But my first question is about management change. You've obviously you are obviously experiencing a lot of management change at the moment with you, JJ and Claudel leaving your respective CEO positions. I think many investors are worried about an exodus of management only a few years into the Growing Together strategy. How can you give confidence to investors in the continuity of business strategy and its performance? And then the second question is on U. S. Margins. You've obviously seen strong expansion year over year.

25:03 How much of this is driven by the favorable mix effect versus underlying business trends like gaining share? And how sustainable do you think it is? Thank you very much, Will. On The U. S. Margins, Yolanda will give a few comments on the management change, I will. It's of course a sad thing that we see both JJ and Claude decided to leave the company. Especially also JJ with thirty six years in the company and big contributor to the success of our company and a growing together strategy. And the same for Claude who did a lot of very good work in Europe on the sourcing, on the digital piece, on the own brands piece and also strengthening the organization itself.

25:56 But again, it's also up to them to make those decisions to leave and to adopt another proposition out there. Having said that, we have a strong company on talent and succession planning. We have already catered for the right processes. Myself, together with the supervisor board, are working on the succession planning for both JJ and Claude that is progressing well. And the other thing is, one thing we should not forget is that we have super strong brands operating locally in the market with their own teams.

26:41 We have very good functions and very good officers also dealing with those functions. So we're a very robust and strong organization in general. And that's also what we have dealt with in the past when we had management changes that that robust organization, well trained experience, knowing the markets very well was a very good catalyst to run these kind of transitions and making sure that we stay in the safe waters of delivering on our growing together strategy. And that's exactly our plan, not only for this year, Will, but also for fulfilling the coming years of growing together, which so far has been a successful plan. So that's management change.

27:26 U. S. Margins, Yolanda? Yes. And thank you for the question, Will. We indeed do not guide on margin, as you're aware, on the regional level and the guidance of around 4% was reiterated with confidence. If I look at The U. S. Margin, there are many levers, as always, to be mindful of. There is indeed weather, the calendar impact that we disclosed, which is incidental. We have some upside from the ag deflation, as we call it. So the ag prices went down, which negatively impacted our sales, but had a slight uptick in our margin, which will phase out in the coming quarters. We had a slight uptick from pharmacy in our margin, but also our structural profitability of our online business, which is improving, contributes to the positive result. And also, see we a slowly but surely improvement in shrink level.

28:29 And that, of course, combined with price investments that we're making, and that will continue in the quarters to come. So I hope that this gives some background on the buildup of our U. S. Margin. Understood. Thank you very much, Ben. Thank you. We will go with our next question. The next question comes from Xavier LeMin from Bank of America Securities. Please go ahead. Yes, good morning. Thank you for taking my question. Two, if I may. The first one, can you please comment the food inflation you're seeing potentially across region with the kind of equity trade you've seen during Q1? And maybe if you can comment to April. Just to understand if you've seen any chance given this crisis, that would be the first question. The second one is about the consumer behavior. So do you have any concern going forward?

29:23 And what are your expectations? What's the change from what you said back to February and what you see right now? So do you see consumer behavior changing? Do you have any concern going forward? Thank you for your questions, Kathy. I'll start with the consumer behavior question. If you look at our strategy, which was launched in 2024, it was centered around the customer and the customer being, one could say, on the hunt for value. We see that customer value focus intensifying in a way, but our strategy ties into that. We disclosed that the launch of a strategy that we were stepping down on our own brand penetration and we aim at 45% for the group, offering consumers those own branded products at low prices and high quality levels. So that is a part that ties into that consumer behavior trend.

30:18 The second part, of course, relates to our price investments, billion additional price investments in The U. S. Alone and we're well on track to execute them. And we also see the positive response in, for example, in our volumes because our volumes in The U. S. Were stable, whereas market data indicates that the overall market was highly negative. So the initiatives we took to support consumer trends and and the the hunt for value are playing out. In general, we see consumers seeking for convenience. So our online step down tie ties into that. We see that ready to eat and ready to heat solution are gaining traction, and we see that healthy options, as I referred to also in my short introduction, it's also also gaining traction.

31:07 But it all ties down to our going together strategy. So we're quite well prepared to respond to that. Maybe, France, you want to allude on the first question? So, Pierre, on the on inflation, when we look at The US, we always work at this food at home Northeast inflation level. It was for us 2.1% in the first quarter coming down from 2.4% in the Q4 that is for The US. And that differs of course by category, we see some elevated categories like cereals and bakery, but also we also see big category like dairy coming down and the same for the eggs as Yolanda already mentioned before. When we look at Europe, the food at home in the Dutch market, 1.7% coming down from 3.7% in the fourth quarter. So that's a percentage two down.

32:02 And in Belgium, almost flat with 0.1% coming down from 2.9% in the fourth quarter. Just to give you an idea about the biggest markets we have. And there's a little bit of mix back in the CSE countries, but also their inflation, for example, in The Czech Republic and Serbia came down quite a bit. Thank you. Thank you. We will go to our next question. The next question comes from Sreedhar Mahanklij from UBS. Please go ahead. Hi. Good morning. Thanks for taking my question today. First of all, France, really many congratulations on the update on your retirement next year. I think your achievements really speak for themselves that I'll hold delays and delays prior to better than last year.

32:53 So I think a super clear transition plan with a long period of gestation that you put in place. All very appreciated. Thank you for all this over the years. And maybe just a couple of questions. Firstly, I think you've just referred, Yolanda, I think to some phasing in The U. S. Margins in the release. You talked about accelerating Stop and Shop investments in The U. S. By the end of twenty twenty six. How much of the change is it versus your prior plans? And does that mean we should be a little bit more social spect on The U. S. Margin outperformance that we've seen perhaps in the last couple of quarters or so? So that's the first question. Secondly, also, I think, Yolanda, you've talked about a couple of regulatory changes you are assessing in Serbia and The Netherlands.

33:45 It would be amazingly helpful if you could talk through what is changing and how we should think about it moving forward for the rest of the year or into 2027. That would be very helpful. Thank you. Thank you, Sreedhar, and also thank you, Will, for the good wishes. I take them on board, but to be honest You have to work for quite a while. We are in full flow for delivering on '26 and teams are very sharp focused in a dynamic time as we have now. So you can count on me for the full year to make sure that we deliver. But on a few questions, Sreedhar, Stop and Shop and pricing or US in overall. You know that we said earlier for our four years strategy, dollars 1,000,000,000 on price investments in US spread equally over the years.

34:37 And so also within the year, intra year, it's spread equally over the quarters. And we had earlier the question already, does Stop and Shop get a much higher proportion of that piece? And we also said also Stop and Shop gets its proportional part of the pricing. But we will see a second round of pricing in The U. S. As we promised and as we also can afford because we have a little bit higher margin in The U. S. As you can see. So there's some space and some room to invest there and we have a growing together strategy. So we go for sales and volume growth in The U. S. And we already shared with you some very good news on Stop and Shop, if it's NPS, if it's market share, if it's volume growth. And there also for Stop and Shop, you will see quite some good investments on pricing coming in the coming weeks and throughout this quarter as well.

35:33 I'm very proud about Roger and the team. We understand now where elasticity is and we see good uptakes there. And also this together with our own brand proposition for Stop and Shop. We are getting in the right space of getting Stop and Shop back on its feet. Too early to call victory, of course, but happy with the investments we're going to make. Regulations. Regulations. Yes. If we look at the two one I highlighted, and hello, Shweta. Thank you for your questions. The two that I highlighted was the first one around Serbia. So indeed, the governmental decree and intervention on grocery industry pricing has ended, but it did impact our Q1 results both in top line and in UOP.

36:22 So that will phase out as we rebuild our market position in the quarters to come. But I also refer to in Serbia was the so called UTP that will not impact sales nor our margin. It could impact our free cash flow delivery, of course, because it impacts the payment terms that we have. We are affecting that impact. Overall, as we said earlier, we reiterated our guidance also on free cash flow. So we think we can manage around that one. Then the last one I shared was on the wage inflation in The Netherlands, which is quite substantial also going forward. So we need to offset that where we can with productivity improvements, increased efficiencies, etcetera.

37:08 And as you are aware, we also have a steep cost reduction program again in place of 1,250,000,000, and we're well on track to deliver on that, which then supports us again. Thank you. Thank you. Thank you. We will now go with our next question. The next question comes from Rob Joyce from BNP Paribas. Please go ahead. Hi. Good morning. Thanks very much for taking the questions. Yeah. I just want to echo, Sri, that was a comment from my friends. I wish you all the best, but it was a year to go. Questions. So U. S, I guess, can we are we isolating any sort of consumer slowdown purely to Snap customers? Or are we seeing a more broader slowdown?

37:55 And should we read those price investments as broader reactions to what's happening in the market at the moment or are they purely proactive? And then the second one is just France. I'm guessing you're going to have some kind of handover period with Thierry at some point. Just to understand what you think he should be focusing on and where you'll be directing his attentions as he as he takes the role? Thanks very much. Hey. Thank you for for the questions. I'll take the first one, and France will talk about your handover question. We are facing our price investments in an optimal way to drive growth with a sharp eye on the results that we promised to the market. We're not responding to the immediate changes that we see because, as you know, we already disclosed that we would invest heavily in prices at the start of our of our strategy.

38:48 Yeah. And I I would I would dare to add to that story, Yolanda, also that we see a quite positive momentum at the moment in The U. S. We, relative to our competition, we have better volume numbers. We see sales picking up. We see a number of brands reacting very positively to our price investment on brand propositions and the improvement of our execution. So that momentum we will use to the summer to make the right price investments and to see where we can find some acceleration. On the handover, I think that is much It's too early, but Much too early again. I think what we have to do ourselves in this year and in this twelve months out, have a strategy which you know, we have a market which is dynamic. So we will make some intelligent tweaks to our strategy to find the right proposition for our customers in a sentiment where they are. We have with Jan Brecht on board, our new CTO, quite a lot of energy on looking at our technology, digital, loyalty, AI agenda and we make very good progress on that also with The US and European teams.

40:03 So that means that we will have a stronger tech background in the investments we make, making sure that we are getting better seamless proposition for our customers. So that development you also will see in 2026. And I'm pretty sure that with the plans we have now, with the delivery, the foundation we have, we'll give a very good set of ingredients also from our successor to build on this and to have, of course, also from his view, a fresh look and perspectives as well, which we always appreciate. So, solid foundation, a lot of things happening. And I think in the coming quarters, you will hear more about yeah, the new elements of how we're going to tweak our growing together strategy to serve our customers even better.

40:57 Okay, thank you. Just sorry to follow back on that Snap customer. Is it is it really only the Snap customers you're seeing sort of change in behavior in, or are you starting to see a more broader change in US customer behavior? Overall, the Snap impact is the most visible one, and we have been talking about the customer being on the hunt for value for quite a while. If you look at the general context in the world, of course, there is a lot of uncertainty and there is the risk of inflation getting higher and that will impact the markets that we're operating in at large. And that is the information that we have at this point in time. Okay. Thank you. Thank you.

41:42 We will go with our next question. The next question comes from Ferdinand De Boer from Degroof Petercam. Please go ahead. Yes, good morning. It's Ferdinand De Boer from Degroof Petercam. Actually, one follow-up question and one other question is on the follow-up on the price investments you're making or going to make in The U. S. This comes on top of to be clear, is this on top of the SEK 1,000,000,000 or is it part of the SEK 1,000,000,000? That's the first question. And then on Europe, could you say a little bit on the market share trends for Albert Heijn and Delhaize in Belgium and Albert Heijn, of course, in Netherlands? Yes. Thank you for your questions, Werner. Now the price investments we talk about are part of the 1,000,000,000 that we disclosed when we had our strategy day. So it's deploying the announced 1,000,000,000 in a certain phasing to optimize growth versus the UOP that we get back for it.

42:44 And then, good morning. In our Dutch and Belgium markets, we're seeing continuation of the trend. That means Albert Heijn is gaining further market share. Albert Heijn in Belgium is gaining further market share. Delhaize in Belgium is gaining further market share. And Bol is very stable on its market share. So, very content with the developments in the Benelux and it's nice to see that our Delhaize colleagues in Belgium after the big operation, they are really trending better than original business plan and that is nice to see and that is the situation on the market shares in The Netherlands and in Belgium.

43:31 Thanks. May I have one follow-up? On Yolanda, in your prepared remarks you mentioned something, Is the quarterly performance going to be more volatile that full year performance should be still in line with guidance? Is that the way we should read it? Yes, that's more referring to the cadence that we choose because we are phasing to optimize also, for example, in view of the summer period ahead, where to deploy which price investment to get the biggest return for that investment. So that is just the phasing throughout the year. Okay. Thank you very much. You're welcome. Thank you. We will go with our next question. The next question comes from Francois Desgardes from Kepler Cheuvreux. Please go ahead.

44:19 Good morning. Two questions on my side. First on online sales, they remain quite impressive in The U. S. Could you help us understand what is attributable to new partnership on one end and the higher demand on the other end? Given the timing of the partnership secured in 2025, should we expect this growth rate to moderate over the course of the year? And my second question is on group margin. What is the main reason for maintaining the guidance despite a stronger than expected Q1? Is it the intention to accelerate at Stop and Shop, geopolitical concerns, something else? Thank you. So beyond the volunteers to give an answer on the group margin I always like that topic, Franz. And I will talk a little bit more about the online sales growth. It's quite impressive, point 3% in the quarter.

45:17 We have a record high 10% penetration of online sales in The US. The eighth consecutive quarter, as Yolanda already mentioned on double digit online. Where is that coming from? It's coming, first of all, from all the brands. Food Lion stepped in a little bit lower, so they have higher, even higher growth rates than the 14%. But Stop and Shop is still the company in our total network with the highest online penetration. We work with the click and collect system where, through which 90% of our customers have access to our online proposition and more than 90% is access to online same day proposition. And the other thing is that we also work with those partners. So if we would give you a little bit of that here, roughly 60% of our total sales, online sales is coming through the click and collect proposition, which is our own facility and our own swapping the stores and network.

46:23 We made quite some adjustments in reducing our assets the last two years. So it's really sweating our own stores. And the other 40% is coming from marketplaces where we started with Instacart, successful with DoorDash and now we added also Uber Eats. The beauty of those three marketplace partners with whom we are very happy in the way we communicate and they are very happy with our $60,000,000,000 food sales on the East Coast and strong number one and two positions is that they have different customer journeys and serve different customer attributes and different customer needs. So there's quite a high level of complementarity. The other good thing is that through those partners, we also get new customers. And that is also a great thing. We'll also contribute to this sales growth numbers.

47:13 And if you look at those sales growth numbers and you compare us with quite some other players in our market, we also gain online sales there, online sales share there with most of them. So, this is little bit more color on the online, what's going on in The US. And then your question on the margin, why we iterate our guidance was over delivering in Q1. I hope that you would be very pleased with us reiterating our guidance, but let's dive a little bit deeper. There are some one offs impacting Q1 that will phase out as we revert to. And we also alluded on the phasing of price investments that will have an impact on the quarterly margins going forward. And last but not least, although the direct impact of The Middle East, conflict are limited, there are still because we're largely hatched on, for example, diesel and energy. There are still some impacts that we need to, mitigate, and that is has been taken on in this guidance.

48:18 And also, snap impact on sales that we alluded to that although the sales impact we have disclosed the number, there is also an impact, of course, of that sales not flowing through to our margin. So it's, as always, many levers to look at. We are confident that we can deliver on the plans that we disclosed and on the results that we included in our guidance, even with the slightly increased risk profile that is related to The Middle East and SNAP. Thank you. That's very clear. Just if you could follow-up on the first question on online sales. Could you help us understand the shape of growth you expect for the year? Because Uber is pretty new, so does it help to maintain this circa 14%, 15% growth over the next quarters?

49:14 There's an item with high interest, I understand that, but we don't guide on full year online sales shares and also not distribute over the quarters. We're very happy with online double digit this quarter and we think that online is a substantial part of our proposition in an omni channel world and depends also on customer demand and it is of course also different brand by brand and region by region and higher and lower penetrated brands so far. And it has our utmost focus. So we are focusing on it as it is part of that growth engine that we're feeding. Yep. And it's getting more profitable at the same time. We have total allocated profitability, but the probability is growing.

50:04 Great. Thank you very much. Thank you. We will go with our next question. The next question comes from Maxime Strannart from ING Bank. Please go ahead. Hi. Good morning. Just one question on my side, if I may. Looking at working capital in Q1, obviously, quite a sizable outflow, especially related to payables, if I'm not mistaken. So I understand that part of this is due to timing and the timing of Easter especially, but could you maybe quantify what was actually the impact of that earlier what's at later Easter this year? That would be very helpful. Thank you. Well, thank you for the question. And indeed, it has, of course, all our attention. We're very working capital focused.

50:52 You were right, the working capital created that negative free cash flow impact in the first quarter and was mainly related indeed to payables. And also for the rest in the call, our payable position trends around 9,000,000,000. So a few percent of deviation in timing already has quite an impact. We're used to managing that over time. And the deviation that you've seen in Q1 was mainly related to the outperformance of last year at the end of the year, and then you take that onwards in the first quarter. And this is as much detail that I could share. I think what helps is the reiterating of our guidance also on free cash flow. So we do expect that to phase out going forward. Well, thank you for your time, and congrats again to France for his retirement.

51:46 Thank you. Thank you. We will now take our final question for today. Your final question comes from the line of Matthew Clements from Barclays. Please go ahead. Good morning. Question on inflationary pressure for this year. In your results, you talked about differences in the to your position in recent history. But perhaps you could just talk generally about what you're seeing in supply chain, how that compares to 2022, 2023 and how you think about some of these pressures working their way through the supply chain through this year? And the second question would be on QuickCommerce. We're seeing some of your peers, particularly in The UK, talking about rapid growth in QuickCommerce.

52:32 How are you positioning that channel? What's the scale? What's the approach? What's the profitability profile at the moment? And how do you think about things like retail media and data ownership in that context? Thank you. Well, thank you and thanks for the good wishes the year out. But I keep reiterating. You have to work for the next twelve months. That's what I intend to do. I'm fully energized, but that's for sure. So forward looking inflation, that's more or less what you asked. I understood your question. We have economists working on all these kind of topics and follow commodity prices and follow energy prices and follow packaging prices and these kind of things. If we then look at a bit at The Middle East, then the conflict there could give all reasons to believe that energy prices are going up. But as Yolanda already mentioned, for 2026, we are largely hedged both for electricity and diesel in both The US and in Europe.

53:38 But if you look at raw materials and commodities, if they go up, then we know that these kind of things always come in when they come with a sort of delay. And we have to manage this, it's not unusual these kind of situations, we have seen more delays a couple of quarters years ago, we talked about cocoa and coffee and all these kind of things. So we know how that works. And therefore also the relationship and the understanding with our vendors is important here that we make sure that with our shoot cost models that we negotiate these kinds of things, that we bring this down to what is real and what is transparent and that we fight for our customers to make sure that we can avoid as much as we can food inflation because that is part of our mission.

54:26 So let's see how this goes. Energy, Middle East, raw materials, commodities, of course, I'm concerned that this might cause food inflation but we work to the max to do the best with our cost saving cost for our several customer programs, the 1,250,000,000 every year in our plans. And this is not completely new and this is not a completely new phenomenon in general. So this is a little bit what I see. For the moment, we do not see big uptakes in inflation, but there's quite some uncertainty in markets and we have to deal with this. And then Matthew, your second question on the quick commerce. We are closely monitoring the fast delivery market. And we, for example, conducted pilots in The Netherlands in a few stores.

55:18 But in The Netherlands, we see that this market is not yet very large. And the disadvantage of this market is that the demand for fast delivery is largely concentrated in those areas where the floor pressure in our stores is already high. So we will continue to monitor, and conduct tests when necessary. And if we see that our customers are seeking for that quick delivery in those areas, we will respond to that accordingly. Very good. Thank you both. So everybody, thank you for joining our call today. For those on the line, you didn't have an issue. For those on the webcast, apologies for that and we will have it fixed on the replay later. What was exactly the fix to be very clear, JP? We make the text is available.

56:08 The recording will be available. Exactly. The PowerPoints are available for everybody who can read through later on. Is that is that the fix? That is correct. Alright. Yeah. Just to make sure that everybody has full access to our commands and data. Yep. Yep. Okay. Thank you very much. And we'll see you guys on the road and many more road shows ahead, Franzia. Yep. I will. Thank you for joining. And we'll see see a few people tomorrow in London as usual. Yes. Alright. Okay. Take care. Bye bye.